Customer Winback Concept Begs for Use of Six Sigma

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"Customer winback" is becoming a common marketing practice in many businesses. The process is aimed at winning back disgruntled customers and then retaining them. Businesses restore the relationship with old customers through a combination of diligent investigations and follow-up, promotion and targeted improvements specifically addressing customer concerns. Companies willing to make the commitment to customer winback immediately see that it is a process that begs for the adoption of Six Sigma practices and techniques.

What Six Sigma Can Do for Customer Winback

The Six Sigma methodology provides a means for achieving two objectives of customer winback:

• Identifying correctable problems which, if resolved, will contribute to the positive improvement of how deliverables are delivered to customers.
• Providing the basis for re-engaging the disgruntled customer to a restored long-term relationship.

Drawing from the book Customer Winback: How to Recapture Lost Customers – and Keep Them Loyal by Jill Griffin and Michael W. Lowenstein, a sales department can apply several key practices. The book indicated, not surprisingly, that selling to former customers has a much higher success rate (20 to 40 percent) than selling to new prospects (5 to 20 percent). Logically, before actively recruiting for new prospects, organizations should explore the option of bringing former customers back into active relationships and transactions.

Investigations are important to find out why customers left the organization. According to Griffin and Lowenstein, there are five basic reasons:

1. Bought away – price-driven reasons (also covers affordability)
2. Moved away – location change
3. Pulled away – took their business elsewhere
4. Intentionally pushed away – undesirable member encouraged to withdraw
5. Unintentionally pushed away – exit because of potentially correctable problems with poor quality or unmet expectations

Elaborating on the fifth option, additional sub-categories include unhappiness, improper handling of complaints, disapproval of changes and the feeling of being taken for granted. These are areas upon which management can control through diligence and attention to necessary details. By correcting and preventing those events leading to unintentionally pushing away customers, organizations can successfully achieve customer winback.

Customers who left should be evaluated for their past history and their potential for future contributions. According to the article, "Recapturing Lost Customers" (Journal of Marketing Research, February 2004), scoring should consider how likely restarting will occur, and how long the restarted relationship will last. The longer the initial relationship, the more likely it will continue after restarting. Those who left more recently also are more likely to restart. 

Best Bet Those Unintentionally Pushed Away

The best chance of winning back a customer arises from those who were unintentionally pushed away. According to Griffin and Lowenstein, more than half of those who left are willing to participate in an exit interview, and a third will reveal how to resume the relationship. Balancing urgency on the one hand and emotion on the other, it is recommended that to get best results customers be approached to answer questions about their leaving 30 to 60 days after they leave. A neutral third-party is often suitable to elicit this information.

Investigations are not meant to embarrass or interrogate, and should be seen as constructive, not punitive. Griffin and Lowenstein outline four steps (prepare, assemble, comprehend and employ) for conducting and managing the information obtained from such endeavors.

• Prepare: Determine what the organization knows and what is missing. (Six Sigma covers this within its Define phase.)
• Assemble: Identify unmet requirements, unheard complaints, priorities and areas of importance, and clearer insights. (Six Sigma addresses this portion in its Measure phase.)
• Comprehend: Having collected the information, determine with data models, regression, and statistical significance, areas that call for action and correction. (Six Sigma adds value during the Analyze phase.)
• Employ: Apply the conclusions to correct problems and improve quality and training. Expand support and resources, and establish recognitions and rewards to encourage member loyalty. (Six Sigma specifically targets this in the Improve and Control phases.)

Six Sigma clarifies the "how" to fully and successfully implement the intentions of customer winback by providing a structured approach to defining the problem, collecting information through designed experiments, measuring and statistically analyzing outcomes and processes for significance, establishing the voice of the customer (VOC) and elements critical to quality (CTQ), and controlling processes and practices that have incorporated the customer needs and wants.

Example of Using Six Sigma to Regain Customers

Using a specific example, a telecommunications company loses customers due to excessive delays in responding to customer requests. An investigation reveals that people do not want to be kept on hold more than five minutes without talking to an actual person who can give them relevant assistance, and they do not want to be diverted or transferred between departments.

Six Sigma measures processes for responding to requests through a single point of contact, and measures the duration of particular requests. Excessive times are charted and noted for further analysis. A routing system is established to reduce idle time and ensure specialists with information and resources pick up on calls. A timer alarms call center employees to pick up any call left idle for more than four minutes to reassure them and start the process of data collection and customer engagement (and instilling the VOC and CTQ measures into the process). Control measures are instilled through training and monitoring to ensure improvements are entrenched.

Customers who were unintentionally pushed away due to excessive wait times are induced back with a temporary discount, and a financial guarantee giving an extra payment if they are kept waiting.

With respect to incentives, offering a customer winback discount may induce commitment in the short term and provide for a second chance. After the commitment is re-established, the customer could then resume normal fees and charges. Such discounts should be managed carefully, and applied only after determining that the customer has a good track record and will be a long-term supporter of the organization.

Six Sigma can be applied specifically to help companies retain their customers more effectively and with less overall effort and cost than by continually recruiting and releasing customers to and from their ranks. From this perspective, conducting Six Sigma initiatives is not only desirable, it is essential for the preservation and positive evolution of the organization, and should be a required component of organizational excellence and customer-driven marketing.

About the Author: Daniel Zrymiak is a software quality practitioner and instructor in Vancouver, British Columbia, Canada. An ASQ senior member, he received the Feigenbaum Medal in 2001, and is certified as a Six Sigma Black Belt, quality manager, quality engineer and software quality engineer. He also has lead auditor certifications for biomedical, hazard analysis and critical control point (HACCP), environmental, and quality auditing. Mr. Zrymiak has a business degree with honors from the University of Saskatchewan, and is presently pursuing post-graduate studies. He can be reached at dzss@shaw.ca.

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